Chip profits rise but stocks fall

Market articles indicate that semiconductor companies are achieving record profits due to the increasing demand for artificial intelligence. However, their shares are declining because of rising bond yields and concerns about inflationary capital spending. Although companies like Samsung and TSMC reported excellent quarterly results, investors have begun reassessing the viability of their high valuations, focusing more on the companies’ ability to turn massive spending into sustainable profits rather than just revenue growth. Additionally, the rise in bond yields, especially to 5.33%—the highest in 24 years—makes bonds more attractive relative to stocks. This shift reflects warnings about slowing demand for data centers and a decline in sustainable profits, suggesting a change in how the AI boom’s valuation, and its continued growth, is assessed.

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